Correlation Between Valeura Energy and Leons Furniture
Can any of the company-specific risk be diversified away by investing in both Valeura Energy and Leons Furniture at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Valeura Energy and Leons Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeura Energy and Leons Furniture Limited, you can compare the effects of market volatilities on Valeura Energy and Leons Furniture and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Valeura Energy with a short position of Leons Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeura Energy and Leons Furniture.
Diversification Opportunities for Valeura Energy and Leons Furniture
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Valeura and Leons is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Leons Furniture Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leons Furniture and Valeura Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Valeura Energy are associated (or correlated) with Leons Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leons Furniture has no effect on the direction of Valeura Energy i.e., Valeura Energy and Leons Furniture go up and down completely randomly.
Pair Corralation between Valeura Energy and Leons Furniture
Assuming the 90 days trading horizon Valeura Energy is expected to generate 2.13 times more return on investment than Leons Furniture. However, Valeura Energy is 2.13 times more volatile than Leons Furniture Limited. It trades about 0.11 of its potential returns per unit of risk. Leons Furniture Limited is currently generating about 0.08 per unit of risk. If you would invest 426.00 in Valeura Energy on September 25, 2024 and sell it today you would earn a total of 214.00 from holding Valeura Energy or generate 50.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Valeura Energy vs. Leons Furniture Limited
Performance |
Timeline |
Valeura Energy |
Leons Furniture |
Valeura Energy and Leons Furniture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Valeura Energy and Leons Furniture
The main advantage of trading using opposite Valeura Energy and Leons Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeura Energy position performs unexpectedly, Leons Furniture can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Leons Furniture will offset losses from the drop in Leons Furniture's long position.Valeura Energy vs. Enbridge Pref 5 | Valeura Energy vs. Enbridge Pref 11 | Valeura Energy vs. Enbridge Pref L | Valeura Energy vs. E Split Corp |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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